Why Should We Care about Inequality?

I'm from a relatively privileged background. My parents are well-educated (they met and married during college), and I grew up in a house where one or both of them had a steady job. I went to public school in San Diego County in a mostly white suburb in a little town called Poway (the town is affectionately referred to as "the city in the country," and we have horse trails and strip malls). Throughout my life I have had friends that are mostly well-educated like myself, that come from similar backgrounds like me, and have similar families. Coming from this type of background, it's easy for me—and I imagine, for people like me—to believe that with few exceptions (e.g., bad apples or unlucky breaks), most people have the same family background as I do, face similar daily challenges, and are similarly happy with their lives.

The truth about life in America is that it is much more unequal than we realize. In what follows, I detail the evidence:

Inequality between the richest and poorest sectors of American society is at an all time high. When dividing Americans into wealth quintiles, the top 20% of Americans who make the most money annually actually possess more than 80% of America's total wealth. In comparison, people at the very bottom (the bottom 20% of annual earners) possess less than half a percentage point of the total wealth in America. When we look at the growing wealth of American society, a similar pattern emerges: since 1979, 63.6% of the growth in American wealth has gone to the top 10% of American earners, compared to 36.4% of that wealth going to the rest of Americans. In short, America has an (extremely) unequal distribution of wealth across its citizens (www.stateofworkingamerica.org).

Inequality in the United States also comes with great personal costs, especially to those towards the lower ends of the socioeconomic spectrum. For example, epidemiologists like my colleague Nancy Adler of UC San Francisco have found that mortality risks increase linearly as people earn less and less money. In other words, if your income is less than $15,000 annually, you are three times as likely to die of an illness/injury (rather than of natural causes) than a person who makes $70,000 or more annually. That is a staggering figure! Additionally, though life-expectancies have increased in the US from the high 70s to the low 80s since 1970, the gains in life-expectancy have gone almost exclusively to those at the top of the income spectrum. Wealthier people are living longer, poorer folks are not. This pattern continues despite improvements in healthcare (www.stateofworkingamerica.org).

There are a number of reasons why being less wealthy, less educated, and having less access to valued goods and services would lead to increased mortality (e.g., poorer healthcare, unsafe neighborhoods, etc...). Because of the many factors that relate economic inequality to mortality, it is my opinion that inequality is, and should always be, a major concern of industrialized nations like the United States. In fact, reducing inequality may in fact be a way to reduce health disparities between the haves and the have-nots. Research supports the idea that reducing inequality will improve the health of less wealthy individuals. For example, according to Marmot (2005) and others, in Canada and in Scandinavian countries, mortality rates are less disparate between the poorest and richest sectors of society, and this is often indirectly attributed to the more equal distribution of wealth in these countries.

The optimistic reality about reducing economic inequality in the United States is that Americans actually want it to happen! In a study by Norton and Ariely (2011) Americans were surveyed about the ideal distribution of wealth in society. These Americans preferred wealth distributions that reflected greater equality of wealth between the richest and poorest people in the country.

Of course, the pessimistic reader out there (such as yourself) might say that inequality between rich and poor is necessary in a free market. That is, to hire talented workers one needs to pay top dollar.

It is possible, that our economic growth and technological advancement does depend on a certain level of economic inequality, though I would argue that it is critically important to limit the extent of this inequality. Norton and Ariely's research suggests that Americans agree with me. The participants from their study didn't want equal distribution of wealth, just more equal distribution, giving a fairer (not an equal) share to poorer individuals.

Unfortunately, inequality in America, as it stands right now, is far beyond acceptable limits, and the evidence of this gross inequality is visible in our everyday lives: To illustrate, on Wednesdays when I travel to Berkeley from San Francisco, I stop by a coffee shop to get a latte. While I get my latte I pass the same homeless man who is panhandling for change. Each week, I buy a latte and go about my usual business and he panhandles for loose change. What sense does it make to live in a world where that happens every week?

Do you think reducing inequality can improve the health disparities between the haves and have-nots? I'd love to read your thoughts.

Norton, M. I. & Ariely, D. (2011). Building a better America: One wealth quintile at a time, Perspectives on Psychological Science, 6, 9-12.

First the stats. They tend to omit three things (a) the change since 2007, when the gini coefficient likely peaked (b) the implied wealth that accrues to the recipients of social programs like SS and medicare and (c) the rotating nature of the participants in the 1% (e.g. it's not always the same folks, much of it is 'one-year' wonder events like a best seller, or sale of a business you've worked 30 years to build).

Invoking these factors changes the picture, somewhat.

Second, the demonizing of the one per centers is inevitable - they're so few in number, they can't possibly make an impact on the debate. So they don't bother. But if you're one of them, you likely have a nuanced view knowing full well you share the bucket with corporate kleptocrats, political grafters and bankers with their heads in the sand.

Pls let's not make this class war fare and throw the baby out with the bath-water.

I wonder if the wealth disparity is truly "at an all-time high", given that prior to the Emancipation Proclamation, there were Americans who were not allowed to own anything, even themselves. That level of inequality is pretty amazing to contemplate.

I realize this is not really the focus of your post, but it's interesting that everyone makes this "all-time high" claim, and no one has mentioned that obvious exception. Which is to say, like most things in the media, it's probably rhetoric based on a partial view.

In terms of the statistics points made by Danje, I'm not sure how much use of social programs equalizes wealth disparities, or if we can conclude that the gini coefficient has peaked (nor if a peak in wealth in the US changes the inequality statistics). Actually, the Norton & Ariely (2011) piece shows evidence suggesting that people like you and I tend to grossly underestimate inequality in the USA.

In terms of the anonymous comment on slavery, I think this is a fair point: that perhaps when people were being owned by others there was a different level of inequality in the USA, and their was certainly less social justice. That's not something we should forget.

I think when discussions arise about economic inequality and some kind of moral imperative to lessen it, it is important to consider why this aught to be done. When I read the title of the article I expected this to be addressed more directly. Instead Michael has laid out strong evidence that there is indeed vast economic inequality in America (notice how I qualify inequality with economic. There are other types which we are not currently discussing) a fact I do not disagree with.

However, if one desires to bridge that gap one must ask, why?

1. Is it to improve the quality of life for people on the lower end of the economic spectrum?

2. Is it to introduce fairness to an inherently unfair system?

3. Is it to redistribute wealth according to who deserves it?

If you choose the first one, you are essentially advocating altruism, which is delightful, but it does raise some sticky questions, namely, how responsible are we for the well-being of others? Personally and as a government/state body. Am I responsible for just myself? My family? My community? My city? My state? The whole world?

Where do we draw the line, and more importantly, who decides where we draw the line? Politicians? The church? Taxpayers? The majority?

This is all just the difficulties if you choose the first option. I'm sure you can imagine various problems and objections to the other two as well. (If you can't, you probably didn't get much out of this comment anyways)

Thanks for the comment rgerace! I think that reasons for reducing economic inequality can include all three of your options, and I think you're right in that there are inherent challenges with coming at economic inequality reduction from all of these different angles. Your questions about the boundaries of responsibility highlight one challenge that I think we don't yet have answers for. It's not universally adaptive to have a society where everyone depends on the goodwill of others who are more fortunate. Ideally, I imagine that most people don't want dependence, they want to have some level of self-sufficiency. Still, I think increasing altruism has many benefits...